Carolina Journal News Reports
RALEIGH — The publisher of a magazine for economic development professionals says North Carolina gave Dell too much when the state offered $242 million in tax breaks to build a plant in Forsyth County.
But at the same time, Southern Business & Development commended state leaders for opening the coffers for the Texas-based computer manufacturer.
"While we don't know exactly how the incentive package North Carolina offered Dell is set up, we do know exactly the history of large incentive packages given out to companies that have announced big deals in the South since 1992," wrote SB&D publisher Mike Randle. "That being the case, North Carolina paid too much for the Dell deal."
That echoes the sentiment expressed by some North Carolina lawmakers, after The News & Observer of Raleigh last month reported that only Virginia appeared to mount any competition for the new Dell plant. Virginia reportedly offered an estimated package of $30 million to $37 million, leading some observers to think that North Carolina dramatically overpaid for Dell.
"It is very frustrating to hear now that there was no firm offer from Virginia," Rep. Paul Luebke, D-Durham, said to The N&O. "It now appears that North Carolina was bargaining against itself. That's very troublesome."
As for SB&D, Randle said that North Carolina had to overpay for Dell because it had missed out on every "signature deal" for the last 10 years.
"Their incentives have been so vanilla," Randle said in a telephone interview, "that they haven't been willing to write the check."
Randle, in his editorial, characterized North Carolina as the "Grande Dame" of economic development in the South because of its history. He chalked up its early success to the development of Research Triangle Park, but said the state has been living on that reputation for years without justification.
While perhaps one of the most effective states in turning deals that bring 100 to 200 jobs at a time, Randle said North Carolina has been historically weak in luring major industries. He said the state's high ratings by other economic development publications such as Site Selection and Plants, Sites & Parks have been unwarranted because they are based on surveys of professionals, not on statistics. Gov. Mike Easley has taken particular pride in North Carolina's No. 1 ranking for business climate by Site Selection in recent years.
"Surveys to us, especially if they're being conducted by executives outside the region, mean nothing to us," Randle said.
He said that SB&D annually ranks states in the South based on numbers of economic development deals that contain more than 200 jobs each, and assigns each deal a number depending on the size of the project. The more jobs, the higher the number SB&D assigns. Randle said North Carolina's ranking has dropped every year since 2000, from 335 points to 160 points last year.
"There's nothing arbitrary about that," Randle said. "There's no survey."
Randle, despite his belief that the state overpaid for Dell, praised North Carolina for finally getting a “crown jewel.” He said it could have gotten more bang for its buck with an automobile plant such as Mercedes or BMW, which have located in other Southern states in recent years. But he said now that Dell is coming to the state, other computer manufacturers would likely find North Carolina appealing.
"Recent economic development history in the South has proven that big corporate or industrial deals earn the state in which they are turned many times over what that state paid in incentives," Randle wrote in the SB&D editorial. "It's about time the folks of North Carolina took a $250 million chance with a signature corporate citizen so they can learn that themselves."
Dan Gerlach, economic advisor to Easley, acknowledged receipt of questions e-mailed to him for this article, but declined to answer them. He has vigorously defended the Dell deal in other media since late last year.
Paul Chesser is associate editor of Carolina Journal. Contact him at firstname.lastname@example.org.